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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

FTSE 100 hits two-week high on eve of Brexit vote – as it happened

A view of Docklands and Canary Wharf.
A view of Docklands and Canary Wharf. Photograph: Linda Nylind for the Guardian

TNS give Leave a lead

And finally.... here comes another opinion poll from TNS.

And it shows that Leave are in the remain, by 2 percentage points. That means the gap has narrowed, compared to the seven point-lead which TNS recorded last week.

But.... among those likely to vote, TNS has a healthier lead of 7 points...

And this latest poll-of-polls suggests that the two sides are still neck-and-neck....

Something for the City to chew on overnight.....

And that’s all for us for tonight.... Our main EU referendum blog is still running, and full of all the political developments.

I’ll be back tomorrow. Thanks. GW

Pantheon Economics: Remain campaign to get late surge

Pantheon Economics, the City firm, have just predicted that the Remain campaign are in a better position than the polls show.

They believe that the opinion polls are wrong, when they suggest the result is close, and that the markets are right to predict a Remain victory.

Chief economist Samuel Tombs says:

Polls suggest Brexit is a coin toss, but they usually miss the last minute surge in status quo support.

The self-reported likelihood to vote of younger people, who typically back Remain, has shot up. Europhile areas of Britain have seen bigger rises in voter registrations than Eurosceptic areas.

One factor is that polling companies think young people are relativels unlikely to vote. That’s a false assumption, Samuel reckons:

Polls by ORB have shown that the proportion of 18-to-24 year olds reporting that they will definitely vote rose to 51% last week, from 29% at the start of June. The same trend was observed among 25-to-34 year olds.

Polling expectations

Just time for some thoughts from Jack McIntyre, a portfolio manager at Brandywine Global (part of asset management firm Legg Mason).

I’m betting Brexit will be more similar to “Y2K” than a Lehman moment. The wildcard will be if it is a fairly tight outcome, so I’m not sure if a “remain” vote will solve the underlying EU problems. Clearly, it highlights that a big, vast part of the U.K. populous will still show discontent and frustration.

My view has been that the Brexit referendum was really a symptom of the broader disease. What’s the disease? That we are in a prolonged period of sustained, low economic growth. Incomes have been stagnant for years, which means there is a lot of pent up frustration with the U.K. electorate.

This also explains the support for Donald Trump as the next leader of the US, among those who feel they’re not getting a fair deal.

In this period of challenged growth, politicians and the general populous are pointing the finger at other entities to explain why growth, and therefore incomes, have has been challenged.

Opinium’s website has crashed, under the weight of interest for details about tonight’s poll.

FTSE 100 closes higher despite late wobble

The closing auction for today’s City trading session lasted rather longer than usual, as the London Stock Exchange matched up the last trades and tidied up loose ends.

And when it finally ended, the FTSE 100 is up just 34 points today, or 0.5%, at 6261. That’s a two-week high.....but it could have been better.

Going into the auction, the index was up 76 points and heading for a seven-week high, before a flurry of late sell orders dragged it down.

Financial stocks led the rises, led by investment firm Hargreaves Lansdown, suggesting that investors are expecting the Remain side to win tomorrow’s vote.

The biggest risers and fallers in the FTSE 100 today
The biggest risers and fallers in the FTSE 100 today Photograph: Thomson Reuters

Tony Cross, analyst at Trustnet, says:

There can be little doubting the way that sentiment has swung round – in the region of £100bn has been added to London’s blue chip equities since those lows last Thursday, and the market is pricing in less than a 25% chance of the Leave camp now winning.

The pound has fallen back, after Opinium reported that Leave have taken a small lead:

It dropped half a cent when the results hit the wires, and is now up just 0.3 of a cent at $1.4674.

The pound vs the US dollar today
The pound vs the US dollar today Photograph: Thomson Reuters

Updated

Opinium poll gives Leave narrow lead

Breaking: Opinium have just released their latest opinion poll. And it shows that the Leave campaign have a slender lead.

They give 45% to the Leave campaign, and 44% to Remain.

That’s a slight move to Leave, compared to the last Opinium poll putting the two sides neck-and-neck.

City traders may be tempted to head home for a rest, before the inevitable drama of Thursday night and Friday.

But with an opinion poll due soon, they might want to hang on.....

The FTSE 100 is creeping higher, now up 72 points today at 6299 -- still a two-week high.

My colleague Fiona Walsh has spied people stocking up on foreign currency ahead of tomorrow’s vote, confirming what the Post Office have said today.

A foreign exchange dealership on Cannon Street, in the City of London
A foreign exchange dealership on Cannon Street, in the City of London Photograph: Fiona Walsh

A couple more photos of people queueing at foreign exchange dealers in London have also arrived in our system:

People queue for foreign exchange at a foreign exchange bureau in London, Britain June 22, 2016. REUTERS/Peter Nicholls
People queue for foreign exchange at a foreign exchange bureau in London, Britain June 22, 2016. REUTERS/Peter Nicholls Photograph: Peter Nicholls/Reuters
People queue outside a Change-Link.com Bureau de Change in central London
People queue outside a Change-Link.com Bureau de Change in central London Photograph: PA Wire/PA

Bond trading giant Pimco has predicted that sterling could hit a 30-year low against the US dollar, if Britain votes to leave the European Union.

Mike Amey, PIMCO’s head of sterling portfolios, told a forum organised by Reuters that the pound could fall as far $1.30 (from $1.47 today).

Amey also reckons there is a 60% chance that Britain would remain in the EU. If that doesn’t happen, he believes the Bank of England would cut interest rates to zero.

BBC personal finance correspondent Simon Gompertz has found a queue to buy foreign currency in London today:

That photo was taken at lunchtime; often a busy time in the City. But there does appear to be quite a rush for dollars and euros....

Public race to buy holiday money before EU vote

Some Brits are racing to the high street to stock up on foreign currency, in case the pound plunges following Thursday’s referendum.

The Post Office reports that currency sales this week are 74% higher than a year ago, suggesting that talk of sterling crashing has worried the public.

My colleague Rupert Jones has the details:

The Post Office said branch sales were up by 48.8% on the same period a year ago, while online purchases had increased by 381%....

A surge in transactions was also reported by FairFX, which specialises in prepaid currency cards that can be loaded with money in advance and allow people to lock into a rate now. It said many people heading to Europe or the US in the coming weeks were buying now to guarantee their exchange rate ahead of the referendum result.

FairFX said the amounts being loaded on to US dollar cards, plus orders of dollar banknotes, were up almost 300% this week compared with the start of last week. It has also seen a 100%-plus increase in euro cards being loaded over the same period.

Here’s the full story:

DING DING. Shares on Wall Street are inching higher at the start of trading, as traders watch events across the Atlantic closely.

The Dow Jones industrial average is up 34 points, or 0.2%, in the first few minutes of action, with investors remaining cautious.

Shares hit two-week high, but nerves jangle

The stock market is staging a small rally, perhaps a sign of confidence about tomorrow’s referendum.

The FTSE 100 has now risen by 57 points, or 0.9%, to 6284. That’s a two-week high, taking us back to the times before polls showed Leave gathering support.

The FTSE 100 over the last six weeks
The FTSE 100 over the last six weeks Photograph: Thomson Reuters

Financial stocks, such as Standard Chartered and RSA Insurance, are leading the rally, as are mining giants like Rio Tinto (who are usually hit by economic worries)

The top risers on the FTSE 100 today
The top risers on the FTSE 100 today Photograph: Thomson Reuters

The pound is also holding onto its earlier gains; it’s now up 0.4 cents at $1.4683.

Mihir Kapadia, CEO at Sun Global Investments, says the City is anticipating that the British public will vote to stay in the EU.

‘’With the EU referendum now only a day away, markets are braced for the impact. Polls are very close at the moment, global stocks and the pound continued to rise today, while safe haven assets continue to slip – an indication that investors, at least, are optimistic of a Remain vote come Friday morning.

But if they’re wrong, we could see massive volatility on Friday.

Jasper Lawler of CMC Markets explains:

The sharp readjustment out of safe havens in favour of risky assets including the British pound in the last few days means markets may be underestimating the fallout from a Brexit.

Even if betting and financial markets are proven correct and the UK votes against Brexit, the potential for political fallout in the aftermath is a downside risk.

She’s got a point.....

UBS: FTSE could plunge by 20% after Brexit win

UBS has raised the stakes ahead of tomorrow’s vote by predicting that share prices could plunge by 20% if the Leave campaign win.

Analysts at the Swiss bank have predicted that a Brexit victory would sent the FTSE 100 plunging to 4,900 points, wiping £350bn off the index.

That level hasn’t been seen since late 2011, when the Greek and Italian government’s were collapsing under the strain of the eurozone debt crisis.

However, a Remain win could send the FTSE 100 back up to 6800, UBS reckon. That would be a one-year high.

More here:

Theme of the day.....

Estate agents expect surge of business after referendum result


Houses in Twickenham, London.
Houses in Twickenham, London. Photograph: Alamy

Britain’s state agents are gearing up for a busy Friday, whichever way the vote goes.

Guy Gittins, sales director at London agent Chestertons, said the firm had five or six sales ready to exchange after the vote.

He says:

“They are waiting to go through if the result goes the right way for the buyer’s circumstances.” .

It is not just buyers who are sitting tight - a branch of Jackson-Stops & Staff reports that a £1.4m property in the Midlands has been photographed and is ready to market, but may only be formally put up for sale if the UK votes to remain.

If the country votes to remain Gittins predicts the central London property market will be “back to business as usual”. He said:

“The backlog of the last five months of indecision will come back to the market and there will be good trading towards the end of the year.” If the UK opts to leave, and the value of the pound drops “There will be [overseas] buyers who suddenly see a fall in the price of property … we expect the same as in 2008, when the rest of the world was in meltdown and the London market continued to do well as investors looked for a safe haven.”

Peter Wetherell of Mayfair agency Wetherell said a leave vote could lead to a “Brexit bubble”.

He points out that a weaker pound will boost the buying power of foreign investors.

“If the value of Sterling plummets post-Brexit then it will create a short-term buying opportunity for US dollar and Euro based property investors. For overseas buyers, a big drop in the value of Sterling will effectively offset the Stamp Duty and tax adjustments and make Prime London property a lucrative investment.”

“Dollar based Middle East and Asian investors in particular will look at short-term buying opportunities in Central London and look at acquiring residential property priced up to £6m.”

The pound is creeping higher as lunchtime approaches.

It is now up 0.2% against the US dollar, at $1.4678.

It has already gained a whole 4% in the last few days, as investors became more confident that Britain would remain in the EU.

Online bookmaker Betfair has now taken £45m on the referendum, giving an ‘implied probability’ of 76% that Britain will stay in the EU.

Spokesperson Naomi Totten says it is the biggest political event in its history, with punters now wondering how big the victory margin will be:

Tuesday night’s debate saw very little significant movement in the odds, despite £1m being traded during and immediately after. Attention is now being drawn to the margin of victory for Remain, with between 50.01% and 55% the favourite on the vote percentage mark.

There had been a surge of betting on Leave in early June, as polls showed the mood shifting. But this has reversed in the last week or so.

<insert joke about Bond yields>

The current market calm will be spectacularly broken, once the results of the EU referendum becomes clear.

Dean Turner, economist at UBS Wealth Management, says:

Last night’s debate has had little bearing on the markets today, which appear pensive ahead of tomorrow’s vote. Sterling, the FTSE 100 and the gilt market are all flat, levelling off from some of the cautiously optimistic rallies earlier in the week.

“Polls released later today have the potential to move market expectations either way, but the reluctance of investors to move unambiguously in one direction is a reflection of how tight polling has been. Once the result starts to become clear on Friday, we expect that markets will move quickly.”

Here are some highlights of last night’s EU debate, by the way, in case you missed it:

Leave and Remain clash in BBC’s Great Debate

Another sign that the City is on edge:

A year ago, everyone was panicking about the prospect of Greece leaving the eurozone.

There’s not the same feeling of panic this time; Bloomberg’s Maxime Sbaihi wonders why.....

With the pound and the Footsie 100 both flat, you might think that there wasn’t much going on today.

But traders aren’t out enjoying the sun (even if they could find it). Instead, they’re sitting anxiously at their desks, wondering what drama lies ahead.

Two days ago, the markets were soaring after a flurry of opinion polls suggest a late swing to Remain. That has now petered out, though.

Joshua Mahony, market analyst at IG, says nervousness is rife:

With less than 24 hours left until the UK hits the polling booth, there is a tangible feeling of uncertainty and anxiety permeating through financial markets this morning, with the bullish sentiment that started the week is short supply.

Some German firms fear Brexit

One in three German firms believes a Brexit would hurt them, according to a survey just released by the Munich-based IFO thinktank.

IFO found that 38% of companies believe they would suffer if Britain left the EU, while 62% believe it makes no difference and 1% believe it would be positive.

Brexit jitters are especially common among Germany’s largest companies, IFO says:

Large companies with 500+ employees were particularly anxious about the referendum outcome and 53% expect a Brexit to negatively impact their operations. For manufacturers in the export business, the figure is 41%, which is slightly higher than the overall average.

IFO's survey of Brexit expectations

More here.

Trading is very muted in the City today, says Mark Priest, head of index and equity market making at ETX Capital:

“The recent poll-inspired surge looks like it has run its course and trading is going pretty sideways for now.

Any last minute shifts in polls could radically change things but while the result is too close to call investors seem unwilling to take any big decisions until after the vote.”

A Finnish flag.

Finland government is concerned that it could be dragged back into recession by a Brexit vote.

A finance ministry official told a press conference in Helsinki that:

It [a recession] is possible. But we could fall into that territory also without Brexit. The growth is not that strong, other external shocks could have that impact, too.”

Finland’s economy has already endured a rocky few years due to the eurozone debt crisis, the impact of sanctions in neighbouring Russia, the downturn in the paper industry, and the demise of once-mighty Nokia.

Its membership of the eurozone meant it couldn’t devalue its currency; instead it has embarked on a austerity programme that hit wages, pushed up unemployment, and placed serious strains on its coalition government.

Sterling on edge

The pound is having a nervous morning.

Sterling has been bobbing against the US dollar, and is currently flat at $1.4654. It’s also down 0.3% against the euro, to €1.2997.

It feels like investors are keeping on the sidelines until the referendum is over.

Ana Thaker, market economist at PhillipCapital UK, says there could be more drama today:

There will be last ditch attempts by both sides to persuade the undecided ahead of tomorrow’s vote so volatility will be rife with Sterling bearing the brunt of it and equity markets look likely to be risk-off until the results are announced.

Many traders will be poised for the last few opinion polls:

Iain Duncan-Smith: EU is mired in economic trouble

Iain Duncan-Smith, a leading Leave campaigner, also dismisses economic worries about Brexit.

He’s on Bloomberg TV now, saying that German industry, for example, would want to access UK customers.

The EU is mired in an economic mess and needs access to Britain’s economy, says Duncan-Smith, arguing that the UK could cut a decent trade deal with Europe.

John Longworth
John Longworth Photograph: Bloomberg TV

Pro-Brexit economist John Longworth has rejected the concerns of the business chiefs who are pushing for a Remain victory.

Speaking on Bloomberg TV, Longworth argued that businesses would thrive away from Brussels red tape. He believes Britain could cut trade deals with other countries, pointing out that China manages to export huge amounts of goods to Europe without joining the single market.

Longworth, who resigned as director general of the British Chambers of Commerce (BCC) after expressing support for Brexit, said:

“You don’t need trade arrangements to trade with the world, but they oil the wheels”

He also criticised Europe for imposing tariffs, which push up the cost of food and clothing from outside the EU.

Financial jobs are likely to shift from the UK to Germany and France if the Leave campaign win.

That’s according to the EU’s financial services commissioner, Jonathan Hill (a Brit appointed by David Cameron).

Hill told German business newspaper Handelsblatt that:

“I’ve visited London, Manchester and other British financial centres in the past weeks and warned of the consequences of an exit from the EU.

“Then it could happen that banks and investment funds shift activities and jobs to Frankfurt and Paris.”

Traders in London are anxious this morning, as the final day before voting gets underway.

The FTSE 100 is basically flat, lagging behind the rest of Europe.

Europe’s stock markets this morning
Europe’s stock markets this morning Photograph: Thomson Reuters

Marc Ostwald of ADM Investor Services says investors are posed for the next developments in the referendum race, including new opinion polls:

On the Brexit referendum polling front, there are are online polls due from YouGov, Opinum and TNS, along with a ComRes phone poll, all of which will underline that the pool of floating/undecided voters remains high, and should therefore be treated with enormous circumspection

Updated

Italian PM: Britain should stay

Italy’s prime minister has urged Britain to remain in the EU and help tackle the world’s economic, social and security problems

Writing in The Guardian, Matteo Renzi, the centre-left reformist PM, said the UK must not make “the wrong choice” by embracing isolationism.

Here’s a flavour:

Contra spem, as the ancient Romans used to say: meaning “to hope against hope”, to dare to dream. I am reminded of this exhortation when thinking of Britain’s EU referendum, a vote which offers a clear choice either to stay in, as we hope is the outcome, or to leave Europe.

In my mind’s eye, like all of you, I can see the smiling face of the MP Jo Cox, her life given over to great causes, the photograph with her little son peering at the sunlight through a glade of trees; her senseless death. I can see also the strength and dignity of a democracy that can be divided – bitterly so – on everything, but which nevertheless can stand united and strong when faced with hatred, with the unthinkable, with the absurd.

Seen from Italy, a vote to leave Europe would not be a disaster, a tragedy or the end of the world for you in the UK. It would be worse, because it would be the wrong choice. It would be a mistake for which you the voters primarily would pay the price. Because who really wants Britain to be small and isolated?

Credit Suisse to cut FTSE forecasts by 6% after Brexit

Logo of Swiss bank Credit Suisse.

Wondering how the stock market would respond to a Leave victory?

Swiss bank Credit Suisse has told its clients today that it would slash its year-end forecasts for Britain’s benchmark FTSE 100 equity index by 6%, if Britain voted to leave the European Union this week.

It currently expects the blue-chip index to reach 6,600 by the end of December, but it would cut that to 6,200 if a Brexit occurred.

That’s quite a big drop. However, the FTSE 100 is currently trading around 6233. So Credit Suisse are definitely not predicting a full-blown meltdown.

The agenda: Will bosses' letter make a difference?

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Britain’s EU referendum is just one day away, and there’s really nothing else on the financial world’s agenda.

Last night, UK TV viewers were transfixed by England vs Sri Lanka Spain vs Croatia at Euro 2016 a special debate between the Leave and Remain campaigners, which saw both side trade blows ahead of tomorrow’s vote [here’s a full round-up].

A snap YouGov poll for the Times found 39% thought leave had won it, over 34% for remain (with 17% on the fence). The same group were just a smidgen more likely to vote for remain: 41% to 40%.

So it’s still awfully tight. And this morning, almost 1,300 business leaders haves signed a letter recommending a Remain vote, as EU membership is “good for business and good for British jobs” .

The letter is packed with big names, including Michael Bloomberg and Sir Richard Branson, plus the bosses of half the FTSE 100 (including the chairman of Barclays and BAE Systems and Standard Life, and the CEOs of BT, Burberry and WPP)

They claim that Brexit would damage the UK economy, especially if it meant leaving the single market.

They write:

“Britain leaving the EU would mean uncertainty for our firms, less trade with Europe and fewer jobs...

Smaller businesses and the people they employ are particularly vulnerable to any economic shock which could follow.”

Some of them, such as Branson, have made their pro-EU views known before. But other names on the list are new entrants to the debate.

The letter is online here (behind a paywall, alas):

British business ‘benefits massively from EU’

Business chiefs write to The Times

Will it make a difference?

It could possibly sway waverers, worried that their jobs could be hit by the economic shock caused by Brexit.

But pro-Leave supporters may conclude that these are the ‘elite’ who have done terribly well out of the status quo, and are just fretting that their next bonus cheque is at risk.

Also coming up today....

The economic calendar is very quiet, but at 3pm we do get the latest EU consumer confidence report.

And the head of the US central bank, Janet Yellen, is testifying to Congress again. Yesterday she warned that the EU vote could trigger a wave of uncertainty across Europe.

We’ll also keep an eye on Spain, where voters return to the polls on Sunday in a general election. And also on Hanover, where Volkswagen is holding its AGM. Last year’s emissions scandal should come up.....

Updated

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